2019 (9) TMI 531 - AT - Service Tax

Valuation - inclusion of reimbursable expenses in assessable value - C F Agent service - HELD THAT - The Commissioner (Appeals) though has set aside the demand on TDS and on reimbursement of certain expenditure but he has not given any specific finding on each of the reimbursable expenses viz. Godown rent damage allowance loading charges and demurrage charges - Further all these expenses were reimbursed by the appellant for the various purposes incurred for carrying on the business of C F Agent Service. The impugned order to the extent of Service Tax on reimbursement is liable to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether reimbursable expenses are to be included in the value of service of the C&F Agent?
- Imposition of penalty under Section 76 of the Finance Act, 1994.

Analysis:
1. Reimbursable Expenses Inclusion:
- The appellant, a C&F Agent, appealed against an order demanding Service Tax for the period 01.04.2000 to 31.08.2004. The issue revolved around the inclusion of reimbursable expenses like Godown rent, damage allowance, loading charges, and demurrage charges in the value of C&F Agent Service.
- The appellant argued that these expenses were not consideration for C&F Agent Service but were reimbursements for various purposes incurred in the business. Citing legal precedents, the appellant contended that reimbursed expenses should not be included in the taxable service value.
- Referring to the judgment in UOI Vs Intercontinental Consultants and Technologies Pvt. Ltd., the appellant emphasized that expenses reimbursed by the service receiver should not be part of the taxable service value.
- The Tribunal noted that the issue was settled by the Apex Court, emphasizing that only amounts calculated for providing taxable services should be part of the valuation. The legislative amendment further clarified that reimbursable expenses would form part of taxable service valuation only from May 14, 2015.
- Consequently, the Tribunal, following the Apex Court's decision, set aside the demand for Service Tax on reimbursable expenses, ruling in favor of the appellant.

2. Imposition of Penalty under Section 76:
- The appellant argued against the imposition of penalties under Section 76, contending that if there was a reasonable cause for not paying Service Tax, as per Section 80, the same should apply to penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
- The Tribunal considered the appellant's submissions and found merit in the argument that if there was a reasonable cause for not paying Service Tax, it should equally apply to penalties under various sections of the Finance Act.
- Consequently, the Tribunal held that the imposition of penalty under Section 76 was not sustainable in law, aligning with the appellant's argument regarding penalties.

In conclusion, the judgment by the Appellate Tribunal CESTAT Bangalore addressed the issues of including reimbursable expenses in the value of C&F Agent Service and the imposition of penalties under Section 76 of the Finance Act, 1994. The Tribunal ruled in favor of the appellant, setting aside the demand for Service Tax on reimbursable expenses and holding that penalties under Section 76 were not sustainable. The decision was based on legal precedents and the interpretation of relevant provisions, ensuring a fair and just outcome for the appellant.